This case is first published in the German Law Archive courtesy of:

Translated German
Cases and Materials

Under the direction
of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by Mr. Tony Weir, Trinity College, Cambridge

The plaintiff claims damages from the defendant /state on the ground
that his car was damaged in an accident negligently caused by one of
its traffic wardens in breach of his duty as such. The Landgericht
granted the plaintiff's claim in full, and the defendant's appeal was
dismissed. Only one issue remains in this further appeal, namely the
amount of DM 37.20 plus interest for the plaintiff's loss of use of
the car for the three days it took to repair it. It is agreed that
the plaintiff, a building contractor's employee, would have used his
car for private or business purposes had it not been for the accident,
but that he hired no substitute vehicle and suffered no loss of wages
or other income by reason of its absence. The parties have further
stipulated that the sum in issue is claimed simply as damages for the
loss of the possibility of using the car, and not for a proportion
of taxes, insurance, garaging or other running costs.

The plaintiff argues that the loss of use for three days constitutes an
economic loss compensable in money. The state does not contest the
quantum of the claim, but denies liability altogether on the ground
that this loss was not an economic one.
The defendant's appeal was unsuccessful.

Reasons

I. The state's liability for the consequences of the traffic accident
arises under § 839 BGB in conjunction with art. 34 of the Basic
Law.

II.

III. The objections raised by the appellant are without substance.
The plaintiff may claim monetary compensation for the loss of the facility
of using his car even though he did not obtain a substitute for the
period during which his own vehicle was unusable owing to the official's
breach of duty.

1. Where, as here, compensation is claimed for damage to a motor
vehicle, the nature and extent of the liability depend on § 249 ff.
BGB, where 'damage' is basically the difference between the economic
position of the victim after the damaging event and the economic position
he would have enjoyed (leaving any claim for damages out of account)
had the event not occurred (BGHZ 27, 181, 183-4 with further references).

Damages are awarded to meet this difference. The two alternatives
offered by § 249 BGB (restitution in kind and payment of the sum
necessary to reinstate the previous position) are both designed to place
the victim who has suffered economic loss back in the same economic
position he would have been in had the event calling for compensation
not occurred. The aim is not to reproduce the pre-existing situation
exactly as it was, but to produce the economic situation which the
victim would otherwise have enjoyed. The basic idea of the law of damages
is that the award should make the victim neither worse nor better off
than before, and this is done by comparing the economic situations
before and after the damaging event.
The idea of damage is thus not a purely legal concept, but rather an
economic concept embedded in the law. The person liable in damages must
restore the victim to the economic position which would have obtained
but for the occurrence of the event generating his liability: he must
place the victim in the same economic position he would have had but
for the accident (BGHZ 30, 29; 32, 280-83; 35, 396, 398).

2. Once the idea of economic harm and the duty of compensation under
§ 249 ff. BGB are understood in this sense, the considerations
which follow show that temporary inability to use a motor vehicle does
indeed constitute economic harm even if no substitute is procured during
the period when the car is unusable.

When we compare the economic situations before and after the damaging
event, here the damage to the motor car, we see the following. Experience
shows that temporary unavailability can affect the price of a car:
one generally pays less for a car if delivery is to be deferred for
some reason, such as having to wait for parts, than for a car which
is ready to go. Again, when a car is not available for use, it cannot
be let out on hire, as is generally possible even for a private person.
Someone whose car has been damaged must normally pay to obtain a substitute
or make use of trams, trains or other methods of transport. In such
cases it is agreed that the loss is a material one because the difference
between the economic position of the victim before and after the harmful
event can be measured in money terms: one can render in figures the
shortfall in economic value which is to be made good (BGHZ 11, 16,
26; 27, 181; 30, 29).

Economic analysis must also take account of the fact that the reason one
incurs the significant costs of procurement, garaging, protection,
insurance, motor taxes and so on is precisely in order to have a car
constantly available for immediate use, especially to drive. The person
who invests in a car today, whether he is in business as a commercial
traveller or otherwise, or is an official, manager or workman, does
so at least in part for economic reasons: he wants to utilise his time
more rationally and in particular to make better, more effective, more
productive and less wasteful use of his energies, and a car helps him
to get to and from work more quickly and engage in leisure pursuits
without being dependent on public transport. It is generally regarded
as an economic advantage to have a car immediately available, standing
in front of the house or in the garage, and this is so however often
or rarely use is actually made of it.

For these reasons the economist sees the owner as suffering a detriment
when an accident renders his car unusable for a time. From the economic
point of view this is so not just in cases in which the car can only
be resold at a lower price by reason of its temporary unavailability
or cannot be let out on hire or money has to be spent on procuring
a substitute or using other means of transport: the harm consists in
the mere fact of its unavailability for use, and temporary loss of
use is per se an economic harm which generates a claim for damages.

The principle in the "cruise" case decided by this Senate on 7 May
1956 (NJW 1956, 1234) applies here a fortiori. The convenience of having
a car to use generally has to be "bought" by appropriate expenditure.
This automatically "commercialises" it, so that the deprivation of
that convenience constitutes the loss of the economic equivalent, which
that expenditure was designed to procure.

On this view of the concept of damage the victim who does not spend
money on either a substitute or other means of transportation must have
a claim for damages no less than the person who by reason of the temporary
unavailability of the car must accept a lower price for it or is unable
to let it out on hire or has to spend money on alternative means of
transport. This is in accord with the decision of this Senate of 11
July 1963 (NJW 1963, 2020) to the effect that the owner of a
villa whose value was diminished by serious nuisances which could not
be enjoined could claim a sum by way of compensation notwithstanding
that he continued to live in the villa and neither sold it nor let
it at a lower figure.

Of course the victim will often resent the lack of the car or feel
angry or upset that it is no longer at his disposal while it is being
repaired, but while such harmful feelings may well seem to be immaterial,
they do not exclude the concurrent existence of the material loss
consisting of its unavailability for use.

It is no objection to compensation that at the time of judgment this
economic loss is over and done with. The harm is not neutralised by
the fact that once the repairs were effected the car became fully usable
again right up to the time of the court decision, for the loss of use
was suffered in the past when the car was being repaired, and the economic
loss suffered during that period is for the tortfeasor to make good
by the payment of damages. There is nothing unusual in this. Where
a vehicle is damaged and the victim buys another car, the courts have
held that his claim for the diminution of the value of the old one
is not to be reduced in favour of the tortfeasor by the consideration
that he decided to keep it (BGHZ 35, 396). Again, an injured victim
has been allowed the cost of tonics prescribed by a doctor which he
could not afford to pay for himself (NJW 1958, 627). The claim for
compensation for the harm consisting of an increased need is a claim
which arises directly from the harmful act and is not a claim for reimbursement
whose existence and extent depend on the amount of money paid out to
meet those greater needs (RGZ 148, 68, 70; 151, 298, 300, 303f.).

It follows from all this that the loss here is an economic one.

3. Although § 249 sent. 1 BGB starts out from the principle of
restoration in kind, the plaintiff here is entitled to claim damages
right away. The claim before us is not to have the damage to the car
itself made good, but for compensation for the distinct harm consisting
of the loss of use of the car while that damage was being made good.
Such a claim may arise even when there is no physical damage at all,
as where an official in breach of his duty temporarily withholds the
necessary documents. We need not decide whether the present claim for
damages can be based on § 249 sent. 2 BGB, whereunder the creditor
may as an alternative to reinstatement claim the money needed to procure
a substitute for the damaged thing, or whether this provision is to
be narrowly construed as referring only to the sum necessary to cure
the immediate physical harm. The claim for money damages can be inferred
from § 250 BGB. It is true that under this provision it is a precondition
of a monetary claim to cure the harm that the victim have given formal
notice to the tortfeasor that unless within a specified period restoration
is effected (here by providing a substitute vehicle), it will be refused.
But in accordance with the general principle applied in cases of delay,
no such notice need be given if it would be fruitless, as where the
tortfeasor has made it clear that in no case can he or will he make
compensation. This is normally the case in motor accidents, where it
is obvious that the substitute is wanted right away and the other party
needs time to investigate the legal and factual situation before he
can properly respond. The driver covered by a liability policy is forbidden
by its very terms to give such an assurance himself and the insurer
can only give it after the time needed for further inquiries. In practice
it is virtually unknown for a substitute vehicle to be made available
during the period when a damaged car is being repaired; it is normally
left to the victim to decide how to deal with the loss of use of the
car during the repairs, and the requisite sums of money are forthcoming
only thereafter. It would fly in the face of the known facts to require
notice to be given, for any such notice would be a waste of time and
an empty formality. The victim should be treated as if he had sought
and been refused a substitute vehicle. This is especially so when the
person causing the harm has made a blanket denial of liability, as
the defendant has done even in this appeal. Since the defendant would
certainly have rejected any demand that it provide a substitute car
for the period of repairs, it would have been pointless for the plaintiff
to make such a demand.

Accordingly the victim who has lost the use of his vehicle during the
period of repairs is entitled to claim damages from the party responsible
even if he has not hired a substitute or used other means of transport,
and even if he did not put the defendant on notice to provide one.

Another possible reason for denying the need to give notice under §
251 BGB is that it is impossible to restore the original situation
since the unusable car cannot be rendered usable ex post facto. But
this need not be decided now.

4. There will certainly be cases in which the temporary loss of
possession or use of a vehicle is so imperceptible to the victim that the
economist would see no harm at all. This might be the case where the
owner of the damaged car was away on holiday and would not have used
the vehicle or even have allowed anyone else to use it. The same may
be true of a person with no driving licence who inherits a vehicle
and takes it off the road with the intention of selling it right away
or of a person prevented by an administrative error from using the
car even if undamaged. This is not one of those cases.

While it is true that liability can be reduced or extinguished under
§ 254 par. 2 BGB if the victim fails to avoid or lessen the harm,
we need not now ask precisely what the victim must do in this regard.
A person who could claim the cost if he had hired a car cannot possibly
be said to be failing to mitigate the damage just by claiming damages
without having hired one. That applies here, for it is uncontested
that in the three days it took to repair the car the plaintiff would
have used it for business or private purposes and so would have a claim
for compensation for the cost of a substitute, had he hired one. We
reject the appellant's argument that in the light of common experience
the very fact of failure to hire a substitute shows that the plaintiff
could without difficulty or disadvantage so organise his activities
as to overcome the lack of a usable car; experience shows no such thing.
The defendant has not suggested or proved any way in which the plaintiff
could reasonably have contributed to diminishing the damage.

5. There should be no difficulty in determining the amount of harm
resulting from general expenses, such as the running costs of the car
(insurance, taxes, garaging, interest on and amortisation of the capital
cost), but the matter need not be investigated now since the parties
are agreed on the sums payable and they form no part of the sum under
appeal.

The only surviving claim is for the harm resulting from the loss of use
of the car over and above the waste of those running costs. A starting
point is suggested by the cost of hiring a comparable vehicle. It is
true that the loss of a victim who does not hire a car may generally
be less than such cost, given that it includes an element of profit
for the hire firm, but we need not so hold today, nor lay down in detail
the principles for evaluating the harm when no car is hired and other
means of transport are not used, since the parties are not in dispute
over the amount: it is accepted by the defendant, no doubt in the interests
of simplicity in view of the low amount in issue, that quite apart
from its liability for a proportion of the so-called general costs,
the loss to the plaintiff through not having his car to use for three
days was at least the DM 37.50 which he claims.